Mutual Fund What is a mutual fund?
What is a mutual fund? |
Mutual funds are entities that raise money from a variety of people who invest in stocks, bonds and other financial assets. All these joint holdings (stocks, bonds and other assets) of that company are called the portfolio of that company. Each mutual fund is managed by an asset manager.
Mutual funds are a very good and easy way to make money. It is not necessary that you have thousands of rupees to invest in this, but you can also invest in it at the rate of only 500 rupees per month.
From today's post, we will know what is the meaning of this mutual fund in English and how can we invest in it safely?
Mutual funds are a way of investing in a single fund by raising money from different investors. The fund is managed by a fund manager who invests the money collected from various investors in the bonds, stock market. The investor is allotted a unit for his money. This unit is called NAV.
In a mutual fund, investors share the value of the investment and the profit. Investors decide how much risk they want to take and their return will depend on how well the investment performs.
Mutual funds can be managed passively or actively. An actively managed fund has higher returns, but it also carries more risk for investors who choose that option.
Simply put, a mutual fund is a fund made up of a lot of people's money. In which the money invested is used for investing in different places and an attempt is made to give maximum profit to the investor from his amount. Hope you understand what a mutual fund is.
What is the role of SEBI in mutual funds?
Mutual funds are registered under SEBI (Securities and Exchange Board of India) which regulates the market in India. SEBI's job is to keep investors' money safe in the market. SEBI ensures that no company is cheating the public.
Mutual funds have existed in India for a long time, but even today people do not know much about it. In the early days, people believed that mutual funds were only for the rich.
But this is not the case at all and this perception is changing today. People's attitude towards mutual funds has increased. Today, mutual funds are not just for the rich.
Instead, anyone can invest in a mutual fund for just ₹ 500 per month. The minimum amount to be invested in a mutual fund is Rs. Is 500.
History of Mutual Funds
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India (UTI) in India on the initiative of Reserve Bank of India (RBI) and Government of India.
Its main objective was to attract small investors and acquaint them with investment and market related topics.
UTI was formed in 1963 under an Act of Parliament. It was established by the Reserve Bank of India. And initially she was working under RBI.
UTI was separated from RBI in 1978. The Industrial Development Bank of India (IDBI) got regulatory and administrative control instead of RBI. And UTI started working under it.
Types of Mutual Funds
There are many types of mutual funds. We can divide them into 2 categories. Types of mutual funds based on one structure and types of mutual funds based on assets.
1) Types of mutual funds depending on the structure
Open Ended Mutual Fund
Close Ended Mutual Fund
Interval Funds
It allows investors to trade funds at pre-determined intervals. And the fund can be traded in that fixed period.
We talked about the types of mutual funds based on the structure, now we will talk about how many types of mutual funds are taken on the basis of assets.
2) Types of mutual funds by assets
Debt Funds
Liquid Mutual Funds
Equity Funds
Money Market Funds
Balanced Mutual Funds
These types of funds on the one hand give stability to the investors and on the other hand they also accelerate the growth of income.
Apart from these funds, there are many types of funds, but these are the main and most used funds.
Mutual Funds Good or Bad?
It is not easy to tell directly whether a mutual fund is true or false. Because everything has two sides, but yes people have a better opinion in favor of mutual funds. At the same time, whenever it comes to investing in a mutual fund, you have to understand that you should invest as much money as you can.
Also, always do your own research before investing in any mutual fund. Don’t invest size in anyone’s illusions.
How to invest in a mutual fund?
However, you will find many such Android apps in the market, using which you can easily invest in mutual funds. Some of them are special like Groww, MyCams, InvesTap, KTrack mobile app, IPRUTouch app etc.
Which is the best mutual fund?
Let's find out now what are the 5 best mutual funds you can invest in right now.
Axis Bluechip Fund
Mire Asset Large Cap Fund
Parag Parekh Long Term Equity Fund
Kotak Standard Multicap Fund
Axis Midcap Fund
Benefits of Mutual Funds
Although there are many benefits of mutual funds, today I will try to give you complete information about the important benefits.
1. Professional Management
The money you invest in a mutual fund is managed by mutual fund experts with their experience and expertise.
2. Diversification
The basic premise of secure investing is that instead of putting your money in one place, divide it and invest in many. Each mutual fund invests money in a different place.
3. Variety
Mutual funds have something for every type of person today. There are all kinds of funds, from maximum safe funds for those who want maximum returns, to maximum safe investments for those who want higher returns.
4. Convenience
You can invest in mutual funds very easily. You can also withdraw money from the fund with the same ease. To invest, you need to fill out a form that you can fill out online or offline from anywhere.
5. Affordable
The share prices of big companies are very high. Sometimes you want to invest money in those companies but you can't because of low budget. When many people have money together in a mutual fund, your money is invested in big companies.
6. Tax Benefits
Whenever you invest in the stock market, you have to pay tax to buy or sell shares. But in a mutual fund you get a tax deduction.
Before investing in a mutual fund, collect all the documents and all the information related to the fund. You will be responsible for any damage.
I hope you understand what a mutual fund is. What are the benefits of mutual funds? How many types of mutual funds are there and how to invest in them.
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